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Analysts watch for Putin's reaction to events in Ukraine

Over the weekend Ukrainian government forces scored their first military victories against pro-Russian rebels in the east of the country, but some analysts are now warily watching for any signs that the Russian Federation might intervene more actively in the fighting, although that is thought to be unlikely.

In the last few days pro-Russian militants were forced out of the cities of Slovyansk and Kramatorsk with Ukrainian forces now headed towards the regional capital of Donetsk, where bitter fighting may yet lie ahead.

The above, however, begs the question of how far Russian President Vladimir Putin will be willing to go in supporting the rebels.

The situation in the eastern European country is the biggest risk for the economic outlook in Europe, wrote Holger Schmieding, from Berenberg, in an afternoon note. A first military success by Ukraine over the weekend may bring matters to a head soon. "We have to watch the risk very carefully again," Schmieding explained to clients.

Worth noting, the same analyst called attention to the fact that Russia's covert incursions into Eastern Ukraine, although they have been welcomed by some parts of the local population, have not yet sparked a genuine popular revolt against Kiev.

Rather, the "pro-Russian forces have largely relied on leaders plus heavy equipment and to some extent on volunteer fighters from Russia," that analyst adds.

Lastly, and echoing an observation made to Sharecast by one Russia-watcher, he goes on to explain how Putin is now probably popular enough at home to be able to back down somewhat in Donbass.

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